Slide 1: First Quarter 2020 Earnings Call
ORMAT TECHNOLOGIES, INC. FIRST QUARTER 2020 EARNINGS CALL MAY 11, 2020 Copyright Copyright Copyright©© 2020 ©2020 Ormat 2020Ormat Technologies, OrmatTechnologies, Inc. Technologies, Inc. Inc.
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation includes Forward-Looking Statements and the disclaimer should be read carefully Forward-Looking Statements This presentation, and information provided during any discussion accompanying amounts for 2022 growth (MW) or 2022 operational performance metrics such
Slide 3: Non-GAAP Metrics
NON-GAAP METRICS Reconciliation to US GAAP Financial Information This presentation includes certain “non-GAAP financial measures” within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended, including EBITDA and Adjusted EBITDA. The presentation of these non-GAAP financi
Slide 4: First Quarter 2020 - Prepared Remarks
FIRST QUARTER 2020- PREPARED REMARKS • Q1 2020 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, President • Operations & business updates: Isaac Angel, CEO • Q&A Copyright © 2020 Ormat Technologies, Inc. 4
Slide 5: Q1 2020 Highlights
Q1 2020 HIGHLIGHTS ($ millions, except per share amounts) Q1 2020 Q1 2019 % Change Revenues Electricity 142.9 142.9 0.0% Product 47.4 52.1 (9.0%) Energy Storage Management Services 1.8 4.0 (53.9%) Total Revenues 192.1 199.0 (3.5%) Gross margin (%) Electricity 50.0% 45.7% Product 22.0% 19.2% Energy S
Slide 6: Financial Results
FINANCIAL RESULTS DORON BLACHAR, PRESIDENT Copyright © 2020 Ormat Technologies, Inc. 6
Slide 7: Total Revenues
TOTAL REVENUES Total revenues Total cost of revenues Segment contribution $-6.9M (-3.5%) $-14.6M (-11.7%) 1.0% 24.7% $199.0 $192.1 Q1 2020 74.4% $124.9 $110.3 2.0% 26.2% Q1 2019 Q1 2019 Q1 2020 Q1 2019 Q1 2020 71.8% Electricity Product Energy Storage Copyright © 2020 Ormat Technologies, Inc. 7
Slide 8: Electricity Segment
ELECTRICITY SEGMENT Revenues Cost of revenues $-0.1M (0.0%) $-6.2M (-8.O%) $142.9 $142.9 $77.5 $71.4 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Cost of revenues decreased mainly due to: • Business interruption insurance income of $2.5M compare to $1.3 last year • Decrease of $1.3 lease expenses following the t
Slide 9: Product Segment
PRODUCT SEGMENT Revenues Cost of revenues $-4.7M (-9.0%) $-5.1M (-12.2%) $52.1 $47.4 $42.1 $37.0 Q1 2019 Q1 2020 Q1 2019 Q1 2020 • The decrease in revenues is related to the timing of revenue recognition of the projects included in our backlog Copyright © 2020 Ormat Technologies, Inc. 9
Slide 10: Energy Storage and Management Services Segment
ENERGY STORAGE AND MANAGEMENT SERVICES SEGMENT Revenues Cost of revenues $-2.2M (-53.9%) $-3.3M (-62.6%) $5.2 $4.0 $1.8 $1.9 Q1 2019 Q1 2020 Q1 2019 Q1 2020 • This decrease was mainly driven by revenues and cost of revenues from a one-time EPC project in the amounts of $2.4 and $1.9 million, respect
Slide 11: Total Gross Profit and Margin
TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin $7.6M (10.3%) $81.8 42.6% 37.3% $74.2 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Copyright © 2020 Ormat Technologies, Inc. 11
Slide 12: Gross Margin by Segment
GROSS MARGIN BY SEGMENT Electricity gross margin Product gross margin Energy Storage Management and Services gross margin 50.0% 45.7% 22.0% 19.2% Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 (5.6%) (30.2%) Copyright © 2020 Ormat Technologies, Inc. 12
Slide 13: Selling and Marketing & General and Administrative Expenses
SELLING AND MARKETING & GENERAL AND ADMINISTRATIVE EXPENSES Selling and marketing expenses General and administrative expenses $0.9M (24.0%) $-1.3M (-8.5%) $15.7 $14.3 $4.8 $3.9 Q1 2019 Q1 2020 Q1 2019 Q1 2020 The increase was primarily due to The decrease was primarily attributable to • Increase in
Slide 14: Operating Income
OPERATING INCOME Total operating income $7.3M (13.6%) $53.7 $61.1 Q1 2019 Q1 2020 • The increase was primarily attributable to the increase in gross margin in our Electricity segment and a decrease in general and administrative expenses due to business interruption insurance income relating to the P
Slide 15: Operating Income (Loss) by Segment
OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Energy Storage $7.1 M (13.7%) $-0.4M (-8.9%) Management Services segment $0.6M (-30.5%) $58.6 $51.6 $4.3 $3.9 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 $(2.1) $(1.4) Copyright © 2020 Ormat Technologies, Inc. 15
Slide 16: Interest Expense, Net
INTEREST EXPENSE, NET Interest expense, Net $-4.0M (-18.6%) $21.2 $17.3 Q1 2019 Q1 2020 This decrease was primarily attributable to: • $1.3 million decrease in interest related to the sale of tax benefits • $2.2 million increase in interest capitalized to projects • Lower interest expense as a resul
Slide 17: Income Tax Provision
INCOME TAX PROVISION $18.1 $14.0 Q1 2019 Q1 2020 • Ormat’s effective tax rate for the first quarter of 2020 was 37.2%. • The variance between the two periods is primarily due to the mix of our income in various countries with higher and lower statutory tax rates than the federal tax rate and changes
Slide 18: Net Income Attributable to the Company's Stockholders & EPS
NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income attributable to the Company's EPS1 Stockholders ($M) $25.9 $26.0 $0.51 $0.51 Q1 2019 Q1 2020 Q1 2019 Q1 2020 (1) Weighted average number of shares used in computation of earnings per share (diluted) attributable to the Company's
Slide 19: Adjusted EBITDA ($M)
ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Energy Storage $4.3M (4.2%) $3.5M (3.6%) $0.6M (9.6%) Management Services segment $0.2M (-19.5%) $106.0 $101.8 $100.3 $96.8 94.6% of total adjusted EBITDA 95.1% of total adjusted EBITDA $5.9 $6.5 ($1.0) ($0.8) Q1 2019 Q1
Slide 20: Cash and Cash Equivalents and Restricted Cash
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENT($M) 79.8 80.4 4.3 230.0 58.1 5.6 3.3 319.8 153.1 - - - - - - - Dec.31, 2019 December Revolving Revolving Cash Cash from from Others Others CapEx Debt Divedend Non- non-controlling MarchMarch 31, 2020 31, CapEx Debt Payment Dividend 31
Slide 21: Payment of Principal Due by Period ($M)
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE DEBT AS OF MARCH 31, 2020: 4.7% Debt as of March 31, 2020 Q2-2020 Q3-2020 Q4-2020 Year 2020 Long-term non-recourse debt & limited recourse debt 9.1 8.0 9.3 26.4 Senior Secured Notes (non-recourse) 5.4 4.9 5.8 16.1 Long-term loans (full re
Slide 22: 2020 Financing Activity
2020 FINANCING ACTIVITY • Successfully raised1 $114.3M • $50.0 million from existing lender • Additional loan at 5.44% interest rate • Average duration – 5.4 years • $64.3 million - bond series 3 expansion • Expansion interest rate - 5.45% • Average duration – 2.5 years (1) Including in April 2020 C
Slide 23: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2020 Ormat Technologies, Inc. 23
Slide 24: Generation
GENERATION • 2.7% decrease • Lower generation at some of our power plants mainly due to curtailments in Kenya due to COVID 19 and other curtailments in NV Energy due to transmission line enhancement. Generation (GWh)(1) 1.69 1.65 Q1 2019 Q1 2020 Copyright © 2020 Ormat Technologies, Inc. 24
Slide 25: Puna Plant in Hawaii - Update
PUNA PLANT IN HAWAII - UPDATE • Building the electrical substation: • Construction - expect completion by Q2 2020 • Continued field recovery work • Completed drilling of two production wells • One well blocked after flow test and one is a successful well • Cleanouts and drilling of new wells continu
Slide 26: Puna Plant in Hawaii - Update on Insurance
PUNA PLANT IN HAWAII - UPDATE ON INSURANCE • Property Insurance • Insurers are paying the costs to rebuild our damaged substation. • Business Interruption • One insurer rejected our claim for business interruption coverage, and we filed a lawsuit against him. • This lawsuit will not impact our plans
Slide 27: Growth Plan – Geothermal and Solar
GROWTH PLAN – GEOTHERMAL AND SOLAR • Added 7 MW from Tungsten Solar in Nevada during 2019 • Expect adding between 180 MW and 200 MW by the end of 2022(1) Projected added Project Expected COD PPA Capacity (MW, net) Geothermal Projects U.S - Steamboat Hills Enhancement 19 2020 U.S - Heber Complex 11
Slide 28: Backlog – Product Segment
BACKLOG – PRODUCT SEGMENT • Backlog as of May 3, 2020 – $96.5M • 97.2% Geothermal contracts Backlog geographic breakdown 2% 1% 25% 45% 1% 3% 23% Turkey NZ US Bolivia Chile Taiwan Others Copyright © 2020 Ormat Technologies, Inc. 28
Slide 29: Energy Storage Management Services
ENERGY STORAGE MANAGEMENT SERVICES • Rabbit Hill, Texas (9.9 MW / 10 MWh) • In commercial operation since April 24, 2020 • Vallecito, California (10 MW / 40 MWh) • EPC and permitting progressing on schedule • Southern California Edison (SCE) notified of a potential 3.5 months delay in interconnectio
Slide 30: Capital Needs for 2020
CAPITAL NEEDS FOR 2020 Capital needs ($M) Construction & Enhancements – fully released 135.0 Development enhancement and Exploration – not yet released 41.0 Maintenance CapEx (including drilling in Puna) 29.0 Storage activity 24.0 Enhancement of the production facilities 13.0 Total CapEx $242.0 Copy
Slide 31: 2020 Guidance ($M)
2020 GUIDANCE ($M) Forecast Electricity Revenues 550-570 Products Revenues 140-150 Energy Storage and Management Services Revenues 15-20 Total Revenues 710-740 Adjusted EBITDA 400-415 The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended Ma
Slide 32: Thank You!
THANK YOU! Contact IR: Smadar Lavi VP Corporate Finance and Head of Investor Relations 775-356-9029 (ext. 65726) slavi@ormat.com Copyright Copyright©©2020 2020Ormat OrmatTechnologies, Technologies, Inc. Inc. 32
Slide 33: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED) We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortizatio